When it comes to investments, most people are usually drawn to the concept of fixed income, commodities, equity, and cash. Real estate investments are seen as daunting to younger generations of investors, likely due to legacy practices. However, when it comes to valuing the benefits of various types of investments, real estate offers some of the most incredible returns in the long run. The best part is that the rise of blockchain technology and the Fractional real estate marketplace is now very quickly changing the world.
Real estate tokenization is the primary application of blockchain technology in the real estate world and this advancement is showing great results around the world. Tokenization is basically the process of digitizing a real estate asset. It can be further sold to an investor for fundraising. Tokenization allows easy splitting of property into shares or tokens.
NFTs and how they are being used in the art world
NFT represents the abbreviation for non-fungible tokens. In economics, fungible assets have units and can be interchanged same as money. Generally, it is possible to exchange one currency for another with certain differences in value. But this is not true in the case of non-fungible assets including artwork, paintings, and real estate properties. Digital tokens can be better understood as certificates of ownership that apply to both physical and virtual assets. There are many paintings that are produced and copied multiple times, but the copyright stays with the creator and the buyer of that NFT owns some token proving that this is the original work.
Fractional tokens and how are they being used in the real estate world
While NFTs are disrupting the art world through digitization, fractionalized tokenization is doing the same to the real estate world. As mentioned, tokenization allows for the division of one property into multiple shares that can be further bought and sold by multiple investors. The fractional tokens help to split the valuation of real estate property into several parts, distributed among its rightful owners. This process releases the burden of property taxation and maintenance as the amount is distributed among several individuals. It thereby reduces the investment cost for the property owners.
Over the past several decades, real estate transactions have been too manual and lengthy. But with RealT real estate blockchain, it is now easier to conduct property deals with smart contracts. Many investors now have fractional investment opportunities using real estate investment tokens, which are easier to transact, and they make settlements transparent and quick as well.
Through fractional tokenization, it is now easier to increase the liquidity of the property to potential developers and shareholders. This process also globalizes participation in the buying process. It is one of the most trustworthy and modern solutions for increasing access to investment opportunities in the real estate sector. The process can further ease the development and growth opportunities for the real estate market, as properties become more accessible to all interested investors. Fractional tokenization also disrupts the old entry barrier that tended to make real estate investments only accessible to the wealthy.